Putting Order into Ridesharing Misconceptions

This is an exercise in Logic. The two issues facing ridesharing companies today are:

  1. The rideshare company's status or sector
  2. The driver's status

Rideshare companies are battling courts in two area's; the first is how they are defined as an industry, and the second is what their relationship is to their drivers. Well, its time to put some perspective on these issues and clarify these points.


A rideshare company is a company that has developed and uses an app for providing rides to their clients. A client is someone that registers as a rideshare company customer online, or through their app for the purpose of getting a ride. This makes a rideshare company a technology platform and a taxi service, all in one. Why does it make them both? It's simple; a technology platform is what connects riders to drivers, taxi service is a company that provides cars with drivers. The only difference between a rideshare and taxi hailing system is that taxis are public, they can be hailed either by physical hailing in the street or by ordering a taxi through an app or a phone call to the taxi management system. A rideshare company app is the only way a rider can hail (request) a ride. Essentially, there is no real difference, they both provide the same service and the way to contact the rideshare company is limited to an app.

The idea that Uber states it is only a "brokerage" service is incorrect. A taxi rank does not own the taxi medallions; these are owned by individuals that apply for such a license that allows them to drive for a recognized taxi service. In the case of the London black cabs, the license is the hardest to get in the UK, and perhaps in the world. A taxi driver is a licensed individual that can either own his/her own medallion or rent one and can either own their own car or rent one. Most taxi drivers belong a taxi rank which has a central management team, this team is the human interface that was replaced by the rideshare app, and in fact now we have Taxi rank management apps that are used to supplement the rank managers. Therefore, the Uber app is, in fact, the Uber equivalent of the taxi ranks manager, and as such is used to connect between a customer and a driver just like a taxi rank does. This was the rationale behind the European Unions court that decided that rideshare companies were in fact taxi services.

What Uber is trying to do is confuse with misinformation. When they state that they don't employ drivers and only provide a technology service, they are in fact strengthening the fact that they are a taxi service. There are three business models employed by taxi companies, and one of them matter when the issue of connecting a driver to a rider is the only issue. One model is the fleet and employee model, which is the standard model most of us grew up with and is actually now less of a model used than the other two. The second model is where a medallion owner joins a rank as a partner, just like Uber drivers join the Uber company as a "partner," the taxi driver brings his own car and medallion. The third model is when an individual or company owns a lot of medallions and cars, like a fleet, and rents them out for use, which is the more common model in many countries.

Taxi ranks have partners, which are taxi drivers that came together to set up the rank, and non-partners, taxi drivers that use the rank to get access to the customers that the rank services. Taxi ranks came into existence at a time before mobile phones, since people needed a physical location to order a taxi, it was easier to call one number (that represented a fleet) in an age that had no mobile devices.

As you can see, they are identical in style to Uber, which, according to all their statements, provides a platform for independent contractors. This is exactly what a taxi rank does. The fees that Uber takes for its services is the same fee that a taxi rank takes from the income a driver earns.

Now let's look at the driver. The biggest issue with drivers is their "employment "status. There is no issue if they understand that what they are doing is becoming self-employed, opening an individual business where the capital expenditure (capex) is their car and their "medallion" is the Uber app, since you cannot access it without passing an application method, just as a taxi driver would apply for a medallion, instead receive access to the app. Amazing but without a medallion you don't get access to driving as a taxi driver, so a medallion and the Uber app are the same, only one is local or state given the other is corporate.

Now let's look at the courts, everyone is complaining about Uber this and Uber that, but in fact, they should be concentrating on the driver and not Uber. Uber is an app supplier, they are a big taxi rank. They operate an app in every country, which makes their national, state, and local office the taxi rank. In other words, the Uber office in downtown San Francisco is in fact the Uber taxi rank for SF. All the Uber drivers licensed to drive in the state of California that drive in San Francisco, are licensed (medallion) to do so. The driver is a small business, not an employee, just the same way a taxi driver is not an employee of a rank.

The bottom line: Uber is a technology platform and taxi company, it provides access to drivers to its customers through an app. Drivers are self-employed businesses just like taxi drivers. Once the various states realize this, they will no longer go after Uber. They will however go after the drivers and regulate them as they regulate taxi drivers. It will be easier too, since an independent contractor requires a local and state license, these can then be regulated for specific requirements, and end up leading applicants to Uber and Lyft to undergo a federal, state and local application process before they can work as a rideshare driver.

I think you got this right. It’s about time someone made sense of this issue.
Rideshare is the new taxi. The app is just an electronic hailing system, and the app is our medallion. Taxi ranks will be obsolete, fleets with apps will replace taxi’s for a while and then they too will drop dead. Uber and Lyft are here to stay, and we will take over the world!

This is 100% correct. Rideshare companies essentially provide an app for hailing cars. The only difference between a taxi service and a rideshare service is the fact that a passenger can hail a taxi in the street. Apart from that, everything else is the same. Once Uber/Lyft allow people to hail a car in the street, and to use the car must register when they enter the car or using their passenger app (if they are already registered) tap in their ride using the drivers (Uber/Lyft) identity number. Imagine how many more rides we would get that way, and how many more passengers would register as Uber. Lyft users and be registered through the drivers app. (giving the driver a referral bonus)